Oil India moves Supreme Court against AGR verdict
State-owned company Oil India on Wednesday moved Supreme Court seeking clarification of its earlier verdict which mandates telecom and non-telecom companies to pay dues to the government by 23 January, a company official told Mint.
The Department of Telecommunication (DoT) has also sent a ₹48,000 crore demand notice to Oil India in past dues, an order which the firm plans to challenge before the Telecom Disputes Settlement and Appellate Tribunal, the Press Trust of India had reported on Monday, citing Oil India chairman and managing director Sushil Chandra Mishra.
Last year’s Supreme Court order defining telecom revenue has landed a number of non-telecom companies in a soup, with the government asking them to cough up more than ₹2 trillion in pending dues and interest.
India levies licence fees of 8% of adjusted gross revenues (AGR) from every telecom licence holder. Ending a 14-year battle between telcos and the department of telecommunications (DoT), the apex court on 24 October defined AGR as all revenues of a licence holder and not just revenues from telecom services.
The order dealt a body blow to telcos and also made non-telecom companies holding licences for internal communications and signalling liable to pay licence fees on their entire revenue, even if do not offer telecom services.
“The demand for payment by DoT is a credit negative for the company and highlights the risks associated with an unpredictable regulatory environment in India where a number of companies in the telecom as well as other sectors have been impacted by demands for tax and dividends as the government tries to shore up its revenue,” said Moody’s Investors Service.
“As of 30 September 2019, the company reported cash & cash equivalents (including bank balances) of ₹3,800 crore and we expect cash flow from operations of about ₹4,000 crore in fiscal 2020. The amount demanded by the DoT is about 8x the company’s projected EBITDA for fiscal 2020 and about 3x its latest market capitalization. The company has not made any provisions for the payment,” Moody’s said.
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